A.M. Best Affirms Ratings of Emirates Insurance Company P.S.C.

July 17, 2014 10:06 AM Eastern Daylight Time

LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A-
(Excellent) and the issuer credit rating of “a-” of Emirates
Insurance Company P.S.C. (EIC) (United Arab Emirates). The outlook
for both ratings remains stable.

EIC’s risk-adjusted capitalisation remains robust, benefiting from low
underwriting leverage and a reinsurance programme of good credit
quality. Capital requirements are driven by EIC’s exposure to domestic
equities, which accounted for 50% of invested assets at year-end 2013.
The company’s risk-adjusted capitalisation is sufficiently strong to
absorb expansion into inward facultative business, increased premium
retention and volatility generated by its investment portfolio.

EIC maintains a leading position in the United Arab Emirates. After a
period of stagnation, EIC’s diversification into facultative inward
reinsurance business in the Afro-Asian region has enabled it to record
an increase in its gross written premium of 12% to AED 721 million (USD
196 million) in 2013. Given the strategic shift in its profile, EIC
needs to ensure that this new business segment is adequately controlled
and managed.

EIC has demonstrated a track record of strong technical profitability
with loss ratios consistently below 60%, primarily driven by the motor,
property and engineering business lines. Despite a change in the
business mix resulting in higher acquisition costs, the company’s
technical result improved to AED 50 million (USD 13.7 million), with a
return on equity remaining sound at 9.4% in 2013. EIC’s investment
profile remains highly exposed to equity investments, which can be a
source of volatility for its capital position and operating performance.

Upward rating movements are unlikely at present. Downward rating
pressures could arise if there were a material decline in EIC’s
risk-adjusted capitalisation and/or a prolonged deterioration in its
financial performance.

The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Best’s Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.

This rating announcement has been issued by A.M. Best Europe – Rating
Services Limited, which is a subsidiary of A.M. Best Company.
A.M. Best Company is the world's oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.